From an article by Brookings, in April, IMF projected that Africa’s economic growth will decrease by 1.6% this year. As the seemed single largest creditor to Africa, which accounts for 20% of the total debt of African government, China is at the leading role in the debt relief scheme.
China held a reserved opinion on this. At the G-20 Meeting of Finance and Central Bankers on April 16, China’s Finance Minister Liu Kun mentioned that China advocates the suspension of debt repayment from those least developed countries.
It was not rare for China to forgive zero-interest loans for poor and least-developed countries in Africa. There are other methods in the precedent to deal with similar situations such as debt restriction and refinancing.
China shared 20% of Africa’s debt. There are larger creditors including multilateral financial institutions and the private sector. Thus, it more possible to join a collective debt forgiveness.
But there is concern that the Chinese government may not make forgiveness since there is pressure domestically. There was nationalistic sentiment in China against “ungrateful” Africans, which brought government risk to make decisions using Chinese taxpayers’ money to help unappreciative African people.
It is also problematic when it comes to debt forgiveness. African countries won’t be encouraged to borrow money responsibly. Chinese worried that African countries are likely to participate in debt deals with other creditors after receiving the debt forgiveness from China.
The article holds an opinion that China will likely participate in collective decision and burden-sharing rather than playing a leading role in the debt problem.